Employed individuals in Kenya are facing potential monthly deductions following the introduction of the Unemployment Insurance Bill 2022, which has been presented to the parliamentary budget office for evaluation.
The bill, spearheaded by the Ikolomani Member of Parliament Bernard Shinali, proposes monthly contributions from both employers and employees to establish an Unemployment Insurance Fund.
The primary objective of this proposal is to create a safety net for employees who find themselves unemployed or their beneficiaries. The Unemployment Insurance Fund aims to provide financial support during challenging economic circumstances.
Aside from deductions from salaries, the fund will also be replenished through parliamentary allocations, county government funds, as well as contributions from donors and development partners.
According to the bill, the Unemployment Insurance Authority will be responsible for managing the funds, established through parliamentary legislation. This authority will operate under specific regulations and corporate governance, featuring a board of nine members and a chairperson.
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The authority’s functions encompass fund administration, advising the Cabinet Secretary on unemployment insurance policies and legislation, and offering guidance to both levels of government on matters related to unemployment and unemployment insurance policies. Furthermore, it will facilitate the implementation of these policies.
If the bill gains approval in parliament, the Treasury Cabinet Secretary will have the authority to exempt certain employee groups from mandatory salary deductions. This will be done in consultation with the Salaries and Remuneration Commission, which determines salaries for state officers and public servants.
Eligibility for benefits from the fund extends to Kenyans aged 15 to 64 who have been actively seeking employment for four consecutive weeks and are physically capable of working if a job opportunity arises.
Recent data reveals that Kenya’s unemployment rate stood at 5.5 percent by the end of 2022, with income inequality rising to 38.9 percent in 2021 from 35.8 percent the previous year, according to the Kenya National Bureau of Statistics.
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Additionally, Kenya’s economy exhibited a robust growth rate of 5.3 percent in the first quarter of 2023, marking a significant improvement, primarily driven by the agricultural sector’s sharp recovery.
